How do we build 100,000 social rented homes each year?

05.12.2018687XX

Crisis and the National Housing Federation have just published a new report showing that 100,000 social homes are needed across Great Britain. With all but 10,000 of those needed in England, the biggest challenge will be to the Westminster government and will require a step-change in how it delivers housing. The high numbers reflect the backlog of housing need that has built up for those on lower incomes or are homeless, who feature strongly in the Heriot Watt analysis. The study shows that without a substantial increase in provision of social rented housing, the backlog will get progressively worse.

But before looking at the challenge in England let’s see why prospects look rather better in Wales and Scotland. Admittedly in both countries output of new social rented homes is still below what is required, but both governments have plausible targets which would close the gap. In Wales, the government aims to build 20,000 homes over the timespan of the current Welsh Assembly, and of these 13,000 will be for social rent – or 2,600 per year if the target is met. In Scotland, over a similar timespan the target is to build 50,000 homes, with 35,000 for social rent. If the figures are achieved, annual output of 7,000 social rented units in Scotland plus 2,600 in Wales will all but meet the target in the Crisis/NHF report.

As well as having relatively modest targets, both Wales and Scotland have other advantages not enjoyed by England. First, both have maintained their social rented output over recent years, and have not (like in England) diverted money into building to let at higher rents. So the social sector itself and the grant levels provided by the respective governments recognise the importance of social rent. Second, Scotland has maintained high levels of council house building, so that councils already contribute about a quarter of affordable output. Wales is more like England in that respect, and has had borrowing caps on council housing investment which have never existed in Scotland. The recent Budget announcement about scrapping the borrowing caps in England and Wales will certainly help councils to raise their game.

However, the challenge in England is enormous. The government has an implied target of building 50,000 ‘affordable’ homes annually, but this includes the full range of affordable ‘products’, not just social rent. And even this target is not quite being met – in 2017/18 the government came close to it for the first time, delivering 47,300 affordable homes. Within this figure, not quite 7,000 were for social rent (or, in London, for ‘London Affordable Rent’). Both figures were an improvement on the previous year. So far in 2018/19 prospects for a further increase look good, with a further shift towards social rented homes also likely, but output will still fall well short of what is now shown to be required.

Unlike the coalition government, which turned off the supply of funding for social rented homes, Theresa May has at least recognised the importance of social rent in calling for ‘a new generation of council homes’ and restoring grant aid via Homes England. Removing the borrowing caps will also help, as councils work towards building around 10,000 units per year. The fundamental problem though is that building for social rent requires grant of perhaps £70,000 per unit, twice current levels outside London (the London Mayor already offers £100,000 grant per unit). So there will only be a step change in building for social rent if more money is put on the table. Theresa May has indeed promised more, but not until 2022.

This study makes clear that the scale of the problem and of the resources it requires demand a long-term commitment, irrespective of the party in power. Getting such a commitment would be easier if politicians realised that social housing is unique because it substantially pays for itself via rents, welfare savings, reduced demand for health services and its economic benefits. We need an unequivocal acceptance of the wider value of social housing if we are to see a shift in investment of the scale now required.